Bipartisan Group of Senators Introduce Online Sales Tax Bill

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A group of bipartisan senators introduced a bill Wednesday that would require online retailers to charge a sales tax, while exempting small businesses.

While some large retailers are in favor of the new bill such as Amazon others like eBay claim that the legislation does not do enough to protect small business.

The bill, known as the Marketplace Fairness Act, was co-sponsored by Senators Mike Enzi (R-Wyo.), Dick Durbin (D-Ill.), and Lamar Alexander (R-Tenn.), and a number of other Senate Democrats and Republicans.

For years, consumers have been obligated to pay so-called "use" taxes on goods and services bought online. However, the taxes were seldom enforced. That has eliminated hundreds of millions in revenue for the states

Amazon, the online retail giant, has benefited the most from selling products without charging sales tax. However, Amazon has stated that it supports the tax.

Paul Misener, Amazon's vice president of global public policy said, "Amazon strongly supports enactment of the Enzi-Durbin-Alexander bill and will work with Congress, retailers, and the states to get this bi-partisan legislation passed."

The bill provides smaller businesses with some preferential treatment. The bill authorizes a state to require a seller to collect sales taxes if the merchant's "total remote sales" are more than $500,000 on an annual basis. The merchant is granted an exemption if the annual sale are less.

The bill has two methods that authorize states to collect sales tax. States can utilize the Streamlined Sales and Use Tax Agreement or by having a single state agency provide software and services to remote sellers which could be done by simply enacting some requirements for collecting the use tax.

Tod Cohen, vice president for government relations and deputy general counsel at eBay in a statement said, "It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity."